Finally, Proof That Buying Generic Is A Good Idea

Sunday

Jul 27, 2014 at 3:25 PM

Libby Kane

If you're already defending your choice to buy generic against an onslaught of high-profile ads, there's new research to further bolster your case.

A study published at the National Bureau of Economic Research found that the more informed a consumer is about a product, the more likely they are to buy the generic or store brand, whether that's medication or baking supplies.

As Bloomberg View reports, there's a correlation between who knows the most about a product and who buys the (often cheaper) generics.

The researchers looked at seven years' worth of consumer data and found that expert behavior was markedly different from regular shopper behavior. Pharmacists, for instance, went for the brand-name (also known as "national brand") medication only 8.5% of the time, while the less knowledgeable shopper went for it 26% of the time.

Similar patterns arose when chefs went shopping for pantry staples like salt and sugar: The brand-name products made up 40% of total sales, but chefs bought only 23%.

Bloomberg View highlights a particularly intriguing pattern:

It's interesting that health-care professionals show no special interest in buying store-brand salts, sugars or baking sodas; for those products, their choices look a lot like most other consumers'. And while chefs do show a preference for store-brand headache remedies, it's not nearly as great as that of health-care professionals. For the most part, people’s knowledge is domain-specific.

It's also noteworthy that people without a college education were the most likely to shell out for brand-name products, although the study didn't draw conclusions on that point.

The takeaway is simple: Those who know best tend to bypass the brand names for a likely less expensive alternative — so we, the "average consumers," might be wise to do the same.

See Also:

Study Shows The Best-Informed Shoppers Buy Store BrandsRobo-Advisors Vs. Financial Advisors: Which Is Better For Your Money?Here's The Difference Between Good And Bad Debt

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